On February 23, 2006, the SEC obtained permanent injunctions
and other relief against Edward S. Digges and several companies he controlled.
The SEC alleged that between April 2003 and February 2006, the defendants
orchestrated a ponzi scheme,
raising at least $20 million from more than 300 investors. According to the
complaint, Digges offered investments in point-of-sale credit card terminals,
which were sold and leased back by two entities Digges controlled. The SEC alleged
that Digges promised investors lease payments amounting to an annual return of 12
percent and to repurchase the terminals for its full purchase price at the end
of the leasing term.

To sell the investments, the SEC
alleged that Digges falsely told investors their payments were “assured,” in
part through a “reserve fund” that purportedly covered the first months lease
obligations. The SEC claimed that in fact there was never any reserve fund. For
more information about the SEC’s action, you can read Litigation Release Nos. 19554
(Feb. 3, 2006) and 19574
(Feb. 23, 2006).

The Court appointed James D.
Silver as Receiver over the entity defendants. The Receiver has
determined that, in connection with the scheme, Digges misappropriated at least
$4.1 million of the proceeds raised, using them to pay his personal expenses,
and other expenses of his wife and children.